A nationwide study is shedding light on local economic development dollars and how they are evaluated. As reported in Governing:
Most published research focuses on tax incentives at the state level, where the largest packages are typically awarded. A new nationwide survey by the International City/County Management Association (ICMA), though, provides a detailed portrait of how local governments use business incentives and employ accountability measures.
For the most part, the survey of about 1,200 local governments and agencies suggests they’re taking measures that, if done correctly, will help to ensure better returns on investment. Three-quarters of survey respondents reported measuring the effectiveness of business incentives, while 73 percent conducted cost-benefit analyses.
A smaller share (56 percent) reported always requiring performance agreements, while 27 percent had agreements in place for some incentives and 17 percent did not use them at all. Only 36 percent linked economic development priorities to budget processes.
Pew has published a fact sheet outlining how a few states evaluate their incentive programs.
Evaluations of incentives must consider their goals; not all economic development awards are designed primarily to spur job creation. Some target economic development around economically-depressed neighborhoods or in other areas, like transit hubs. Others may exist to raise revenue via property taxes.
One of the more common complaints levied against the subsidies is that only a few companies benefit. Using its subsidy tracker database, Good Jobs First estimated that at least three-quarters of total U.S. disclosed economic development dollars are awarded to only 965 larger corporations.
Officials in Maryland have taken steps to analyze economic development. As previously reported on Conduit Street, the Maryland Commission on Economic Development and Business Climate is examining the state’s economic development structure and incentive programs to provide recommendations to the Governor. Additionally the Tax Credit Evaluation Committee, created by Chapters 568 and 569, Acts of 2012, is charged with evaluating numerous State tax credit programs beginning with the One Maryland Economic Development and Enterprise Zone Tax Credit programs.
For more information read the full article in Governing.
Local economic development will be discussed at the MACo’s Winter Conference during the session “Advancing Your Community…Techniques For Economic Development Strategies.”
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Questions? Contact Meetings & Events Director Virginia White.